* January net profit up 9 pct year on year
* Loan growth mainly flat, interest income up 19 pct
* Shares down 0.5 pct, in line with market (Adds background, analyst, share price)
MOSCOW, Feb 7 Russian lender Sberbank reported net profit up 9 percent year on year in January at 31.8 billion roubles ($1.1 billion), according to Russian Accounting Standards (RAS), on the back of higher interest income.
Sberbank, the RAS results of which are viewed as an indicator of its quarterly performance under international reporting standards, said on Thursday that net interest income rose 19 percent.
The bank, which accounts for about a third of overall lending in Russia, said that it set aside 11.5 billion roubles in provisions for possible bad loans, up from 5.5 billion roubles a year ago. Its non-performing loan ratio was slightly up at 2.74 percent last month, from 2.69 percent in December.
Despite the improvement to the bottom line, lending was largely flat in January, both in the corporate and retail sectors, because of a general trend of weak lending at the start of the year.
Sberbank said it issued 280 billion roubles in corporate loans in January but its overall corporate portfolio was down 81 billion roubles as some large borrowers repaid their debts. Its retail loan portfolio was up 11 billion roubles last month.
Natalia Berezina, an analyst with Uralsib, said the slowdown in lending and increase in provisions were expected by the market.
Sberbank shares were down 0.5 percent by 0840 GMT, against a 0.3 percent decline in the MICEX index.
Russia's central bank expects total lending to slow this year, with corporate lending expected to increase by about 15 percent and retail loans by 25-30 percent this year because of a decline in banks' capital adequacy and lacklustre economic growth.
Last year corporate loans across Russia's 1,000 or so lenders added 13 percent, with retail lending rising 39 percent, prompting the central bank to consider tightening loan provision requirements to cool the retail lending market. ($1 = 30.0707 Russian roubles) (Reporting by Katya Golubkova; Editing by Douglas Busvine and David Goodman)